Weak Demand for 10-Year Treasury Auction
The U.S. Treasury auctioned off some $21 billion in new 10-year Treasury notes on Wednesday, and the auction results were very weak. This latest auction was expected to be closely followed as interest rates have risen handily since the end…
Today’s auction was for roughly $21 billion in 9-year and 11-month notes with a 1.75% coupon going off at $95.933134 for a yield of 2.209%. Some $53.1 billion was tendered and right at $21 billion was accepted. Today’s bid-to-cover ratio was low at 2.53.
Primary dealers submitting bids for the house accounts were actually about 66$% of the total $53 billion in bids but were only about 36% of the total accepted bids. Apparently those dealers were trying to bid on the cheap. Indirect bidders, a signal of foreign demand, came to more than half of total accepted bids at $10.84 billion.
Rising interest rates have been a serious concern for many investors, and we have seen the rotation out of bond-like stocks, higher risk high-yield dividend sectors, and we have seen fixed income instruments in most classes trade softly.
After the auction we have the S&P 500 Index down 6 points at 1,620 and the DJIA down 58 at 15,063. The yield on the 10-year Treasury is currently 2.21%.
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Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.